Home price declines are already approaching those in the Great Depression, when they plunged 30% during the 1930s [i.e. over a 10-year period]. With prices already down almost 20%, it’s not a stretch to think we might exceed that drop this time around.

And the bubble in commercial real estate is also bursting world-wide. See this.

In addition, the percentage of Americans who owned houses during the 1930s was much lower than today, which means that a larger portion of the public is being hurt from falling home prices today as compared to the Great Depression.

In May, analyst Mike Mayo predicted that the bank loan loss rate would be higher than during the Great Depression.

In a new report, Moody’s has just confirmed (as summarized by Zero Hedge):

The most recent rate of bank charge offs, which hit $45 billion in the past quarter, and have now reached a total of $116 billion, is at 3.4%, which is substantially higher than the 2.25% hit in 1932, before peaking at at 3.4% rate by 1934.

Indeed, top economists such as Anna Schwartz, James Galbraith, Nouriel Roubini and others have pointed out that while banks faced a liquidity crisis during the Great Depression, today they are wholly insolvent. See this, this, this and this. Insolvency is much more severe than a shortage of liquidity.

So many Americans have been jobless for so long that the government is changing how it records long-term unemployment.

Citing what it calls “an unprecedented rise” in long-term unemployment, the federal Bureau of Labor Statistics (BLS), beginning Saturday, will raise from two years to five years the upper limit on how long someone can be listed as having been jobless.

***

The change is a sign that bureau officials “are afraid that a cap of two years may be ‘understating the true average duration’ — but they won’t know by how much until they raise the upper limit,” says Linda Barrington, an economist who directs the Institute for Compensation Studies at Cornell University’s School of Industrial and Labor Relations.

***

“The BLS doesn’t make such changes lightly,” Barrington says. Stacey Standish, a bureau assistant press officer, says the two-year limit has been used for 33 years.

***

Although “this feels like something we’ve not experienced” since the Great Depression, she says, economists need more information to be sure.

The following chart from Calculated Risk shows that this is not a normal spike in unemployment:

It is difficult to compare current unemployment with that during the Great Depression. In the Depression, unemployment numbers weren’t tracked very consistently, and the U-3 and U-6 statistics we use today weren’t used back then. And statistical “adjustments” such as the “birth-death model” are being used today that weren’t used in the 1930s.

60 Minutes – in a must-watch segment – notes that our current situation tops the Great Depression in one respect: never have we had a recession this deep with a recovery this flat. 60 Minutes points out that unemployment has been at 9.5% or above for 14 months.

Pulitzer Prize-winning historian David M. Kennedy notes in Freedom From Fear: The American People in Depression and War, 1929-1945 (Oxford, 1999) that – during Herbert Hoover’s presidency, more than 13 million Americans lost their jobs. Of those, 62% found themselves out of work for longer than a year; 44% longer than two years; 24% longer than three years; and 11% longer than four years.

Blytic calculates that the current average duration of unemployment is some 32 weeks, the median duration is around 20 weeks, and there are approximately 6 million people unemployed for 27 weeks or longer.

By February 2010, the U-6 rate for African Americans rose to 24.9 percent.

34.5% of young African American men were unemployed in October 2009.As the Center for Immigration Studies noted last December:

Unemployment rates for less-educated and younger workers:

As of the third quarter of 2009, the overall unemployment rate for native-born Americans is 9.5 percent; the U-6 measure shows it as 15.9 percent.

The unemployment rate for natives with a high school degree or less is 13.1 percent. Their U-6 measure is 21.9 percent.

The unemployment rate for natives with less than a high school education is 20.5 percent. Their U-6 measure is 32.4 percent.

The unemployment rate for young native-born Americans (18-29) who have only a high school education is 19 percent. Their U-6 measure is 31.2 percent.

The unemployment rate for native-born blacks with less than a high school education is 28.8 percent. Their U-6 measure is 42.2 percent.

The unemployment rate for young native-born blacks (18-29) with only a high school education is 27.1 percent. Their U-6 measure is 39.8 percent.

The unemployment rate for native-born Hispanics with less than a high school education is 23.2 percent. Their U-6 measure is 35.6 percent.

The unemployment rate for young native-born Hispanics (18-29) with only a high school degree is 20.9 percent. Their U-6 measure is 33.9 percent.

No wonder Chris Tilly – director of the Institute for Research on Labor and Employment at UCLA – says that African-Americans and high school dropouts are experiencing depression-level unemployment.

And as I have previously noted, unemployment for those who earn $150,000 or more is only 3%, while unemployment for the poor is 31%.

The bottom line is that it is difficult to compare current unemployment with what occurred during the Great Depression. In some ways things seem better now. In other ways, they don’t.

Factors like where you live, race, income and age greatly effect one’s experience of the severity of unemployment in America.

In addition, wages have plummeted for those who are employed. As Pulitzer Prize-winning tax reporter David Cay Johnston notes:

Every 34th wage earner in America in 2008 went all of 2009 without earning a single dollar, new data from the Social Security Administration show. Total wages, median wages, and average wages all declined ….

Indeed, despite the dramatic photographs we’ve all seen of the 1930s, the 43 million Americans relying on food stamps to get by may actually be much greater than the number who relied on soup kitchens during the Great Depression.

Inequality Worse than During the Great Depression

I recently reported that inequality is worse than it’s been since 1917:

Most mainstream economists do not believe there is a causal connection between inequality and severe downturns.But recent studies by Emmanuel Saez and Thomas Piketty are waking up more and more economists to the possibility that there may be a connection.

Specifically, economics professors Saez (UC Berkeley) and Piketty (Paris School of Economics) show that the percentage of wealth held by the richest 1% of Americans peaked in 1928 and 2007 – right before each crash:

Krugman says that he used to dismiss talk that inequality contributed to crises, but then we reached Great Depression-era levels of inequality in 2007 and promptly had a crisis, so now he takes it a bit more seriously…

Robert Reich has theorized for some time that there are 3 causal connections between inequality and crashes ….

Reuters wrote an excellent piece on the issue of inequality and crashes (discussing the first three factors) last month:

Economists are only beginning to study the parallels between the 1920s and the most recent decade to try to understand why both periods ended in financial disaster. Their early findings suggest inequality may not directly cause crises, but it can be a contributing factor.

Given the above facts, it would seem that the government hasn’t been doing much. But the scary thing is that the government has done more than during the Great Depression, but the economy is still stuck a pit.

Specifically, many economists credit World War II with getting us out of the Depression. (I disagree, but that’s another story).

This time, we’ve been at war in bothIraq and Afghanistan far longer than we were in World War II. But our economy is still stuck in a rut.

Moreover, the amount spent in emergency bailouts, loans and subsidies during this financial crisis arguably dwarfs the amount which the government spent during the New Deal.

Paulson and Bernanke have embarked on the largest bailout program ever conceived …. a program which so far will cost taxpayers $8.5 trillion.

[The updated, exact number can be disputed. But as shown below, the exact number of trillions of dollars is not that important.]

So how does $8.5 trillion dollars compare with the cost of some of the major conflicts and programs initiated by the US government since its inception? To try and grasp the enormity of this figure, let’s look at some other financial commitments undertaken by our government in the past:

As illustrated above, one can see that in today’s dollar, we have already committed to spending levels that surpass the cumulative cost of all of the major wars and government initiatives since the American Revolution.

Recently, the Congressional Research Service estimated the cost of all of the major wars our country has fought in 2008 dollars. The chart above shows that the entire cost of WWII over four to five years was less than half the current pledges made by Paulson and Bernanke in the last three months!

In spite of years of conflict, the Vietnam and the Iraq wars have each cost less than the bailout package that was approved by Congress in two weeks. The Civil War that devastated our country had a total price tag (for both the Union and Confederacy) of $60.4 billion, while the Revolutionary War was fought for a mere $1.8 billion.

In its fifty or so years of existence, NASA has only managed to spend $885 billion – a figure which got us to the moon and beyond.

The New Deal had a price tag of only $500 billion. The Marshall Plan that enabled the reconstruction of Europe following WWII for $13 billion, comes out to approximately $125 billion in 2008 dollars. The cost of fixing the S&L crisis was $235 billion.

CNBC confirms that the New Deal cost about $500 billion (and the S&L crisis cost around $256 billion) in inflation adjusted dollars.

So even though the government’s spending on the “war” on the economic crisis dwarfs the amount spent on the New Deal, our economy is still stuck in the mud.

Given that the government has done so much, but we are still mired in a situation which in many ways is comparable to the Great Depression, it is not a very radical statement to say that the government is doing the wrong things to address the downturn.

I hope that the economy recovers. But the above comparisons are worrisome, indeed.

Watching the classic Christmas movies makes it clear how much of what we understood America to be is simply gone. Oh, the segregated America of the movies still exists in much of suburbia and rural America. Even in the big cities, the melting pot is still very lumpy.

But despite the deep flaws of that America, many of the movies of the 1930s and 1940s showed three things that have been erased from our consciousness of America: the corrosive nature of highly concentrated wealth, the need for and redemptive power of progressive change, and the sense that we are all in this thing called America together. Nowhere is that clearer than in the movie Boys Town.

The basic story of Boys Town is very simple. A priest, Father Edward Flanagan, is confronted with the destructiveness of children who have been abandoned by or are currently being abused by their parents. Many, like the fellow in the opening scene of the movie, turn into violent criminals. Trusting in the power of God (and gently bullying a local small businessman into making donations), Flanagan scrapes together the money first to rent a house, then to buy a farm, which becomes Boys Town. His greatest opponent in the community is a newspaper publisher who, supported by “the good Christian women” (I think this is how it is said, but am not positive), thinks delinquents need to go to prison.

Flanagan’s credo is that “there is no bad boy.” One of the boys Flanagan accepts is the younger brother of a career criminal, Joe Marsh. Joe, although boastful of his own exploits, has some residual streak of decency which causes him to ask Flanagan to care for his sibling, Whitey, on the grounds that Whitey doesn’t have what it takes to succeed at crime. Whitey will test Flanagan’s faith that there is good in all children.

Boys Town is a pure democracy, where the boys set the rules. After picking a fight with and being licked in a fair fight by the present mayor, Freddie, Whitey does everything he can to corrupt the system, offering favors and offices to others. The election features Whitey, Freddie, and a crippled child who (since I’m not positive of his name) I’ll call Paul. Paul wants to run for mayor, and Flanagan encourages him, mentioning obliquely FDR as a role model. For his campaign Whitey simply stages a triumphalist spectacle worthy of a George Bush. Freddie rails against corruption. But Paul says that because Whitey cannot be allowed to win, he will withdraw so that Freddie can defeat Whitey. Instead, the boys recognize that only Paul unselfishly cares about the general welfare, so they elect him.

Continues below

Whitey tries to leave the school, but the school “mascot,” a little boy named Pee Wee who has been Whitey’s only real friend tries to tag along. Pee Wee is struck by a car and seriously injured. Whitey is devastated. He tries to join the other boys in a prayer for Pee Wee but can’t handle it. He drifts away and into town. There, he is present at the scene of a bank robbery, being committed by his older brother Joe. Joe is startled and shoots Whitey in the leg. Joe helps him to a church, swears Whitey to secrecy, and anonymously calls Father Flanagan.

But the bank’s watchman has been murdered, and Whitey is a suspect. The newspaper publisher starts a campaign demanding that Boys Town be closed down. Whitey, determined that he will not be the means by which the place he has grown to love is shuttered, goes to where the robbers are hiding and tells his brother that he will not honor the pledge of secrecy. The robbers take him captive. Meanwhile, other boys have trailed Whitey, and they get all the other boys in the school to confront the robbers. Father Flanagan, arriving late at the scene, finds the boys so determined that he cannot turn them away. Instead, he leads the righteous mob.

Facing down the guns of the robbers, the boys seize them. Whitey’s role is clarified and he is redeemed.

As a bonus, Boys Town has a classic Steve Gilliard line, where Whitey says that he likes the Yankees, and another boy says, “You would!” (a detail that I mischievously include to see if PW will read below the fold). Plus, Father Flanagan is played by Spencer Tracy.

This movie makes some extraordinary claims

– It asserts that human beings are inherently good – It defines the fundamental causes of juvenile crime as abusive or neglectful parents – It claims that there are constructive solutions to juvenile crime rooted in love, rather than punishment – It shows pure democracy as the means to purge corruption from governance – It shows the biggest opponents of reform as the yellow press and “the good Christian women” – It recognize FDR both as a visionary, and as a man of great personal courage who overcame disability

Any genuine Christian will recognize these themes as fundamentally about the transformational power of love. It is love that takes us as we are and, rather than punishing us to make us conform, restores our inner peace that allows us to conform.

It is love that sees us as equals, and it is therefore love that demands democracy. It is love that recognizes the destructive power of self-righteousness and how that, in turn, leads to the slanderous, sensation-seeking press. Consider the pursuit of Bill Clinton over Monica Lewinsky: had every person who had shared his sin declined to participate, the Congress could not have mustered a quorum to impeach him, the newspapers could not have sold enough copy to run their presses and the cable stations would have had no advertisers.

Christmas is mentioned only once in Boys Town, and then just as a moment for a quiet miracle of the heart, as a local businessman is moved to bring the hungry boys a Christmas dinner. But the movie is infused with the miracle of love. It is the miracle of love, and not the story of the carpenter’s son per se that is Jesus. When people forgive, when they treat one another as equals, when they set aside their self-righteousness and accept their own imperfection, then Jesus walks among us.

And so, Boys Town, which is not about Christmas, is one of the best Christmas movies. It doesn’t involve angels and extravagant miracles. In it, there are no magic answers, no credo to boast about, no vengeful God striking down the wicked. Instead, it shows God present in the smallest acts of kindness. It shows the miracle of love transforming those who are willing to let it do so. It shows that wrong is brought down not by individual heroes, but by ordinary people who have been granted the power to run their own lives. It claims, along with Paul, that in being granted perfect freedom, we become genuinely good.

This movie could never, ever be made today. Even if it were, it would in this bizarre age be damned as “socialist.” Instead, it is this age that is damned, damned by its own unwillingness to accept love as the only legitimate power on earth.

This entry was posted on December 25, 2010 at 12:21 pm and is filed under religion. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

The coming year will mark the 150th anniversary of the onset of the conflict, which is usually dated to April 12, 1861, when Confederate batteries opened fire at 4:30 a.m. on federal troops occupying Fort Sumter. Union forces surrendered the next day, after 34 hours of shelling.

The Civil War has forever captured the American imagination (witness the popularity of reenactments) for the gallantry and heroism of those who fought and died, but also for the sheer carnage and destruction it left in its wake. Anniversaries heighten that engagement, and I still recall the centennial of the war in 1961 as a time when kids with no previous interest in American history were exchanging Civil War trading cards along with baseball cards.

My neighborhood friend Jon Udis got a subscription to Civil War Times Illustrated, and our regular discussions of sports heroes Bill Russell, Johnny Unitas and Carl Yastrzemski were briefly interrupted by talk about Grant and Lee, Sherman and "Stonewall" Jackson.

But our conversations, like so many about the war, focused on people and battles, not on why the confrontation happened in the first place. There remains enormous denial over the fact that the central cause of the war was our national disagreement about race and slavery, not states' rights or anything else.

When the war started, leaders of the Southern rebellion were entirely straightforward about this. On March 21, 1861, Alexander Stephens, the Confederacy's vice president, gave what came to be known as the "Cornerstone speech" in which he declared that the "proper status of the Negro in our form of civilization" was "the immediate cause of the late rupture."

Thomas Jefferson, Stephens said, had been wrong in believing "that the enslavement of the African was in violation of the laws of nature."

"Our new government is founded upon exactly the opposite idea," Stephens insisted. "Its foundations are laid, its cornerstone rests, upon the great truth that the Negro is not equal to the white man; that slavery subordination to the superior race is his natural and normal condition. This, our new government, is the first, in the history of the world, based upon this great physical, philosophical and moral truth."

Our greatest contemporary historian of the Civil War, James McPherson, has noted that Confederate President Jefferson Davis, a major slaveholder, "justified secession in 1861 as an act of self-defense against the incoming Lincoln administration." Abraham Lincoln's policy of excluding slavery from the territories, Davis said, would make "property in slaves so insecure as to be comparatively worthless . . . thereby annihilating in effect property worth thousands of millions of dollars."

South Carolina's 1860 declaration on the cause of secession mentioned slavery, slaves or slaveholding 18 times. And as the historian Douglas Egerton points out in "Year of Meteors," his superb recent book on how the 1860 election precipitated the Civil War, the South split the Democratic Party and later the country not in the name of states' rights but because it sought federal government guarantees that slavery would prevail in new states. "Slaveholders," Egerton notes, "routinely shifted their ideological ground in the name of protecting unfree labor."

After the war, in one of the great efforts of spin control in our history, both Davis and Stephens, despite their own words, insisted that the war was not about slavery after all but about state sovereignty. By then, of course, slavery was "a dead and discredited institution," McPherson wrote, and to "concede that the Confederacy had broken up the United States and launched a war that killed 620,000 Americans in a vain attempt to keep 4 million people in slavery would not confer honor on their lost cause."

Why does getting the story right matter? As Mississippi Gov. Haley Barbour's recent difficulty with the history of the civil rights years demonstrates, there is to this day too much evasion of how integral race, racism and racial conflict are to our national story. We can take pride in our struggles to overcome the legacies of slavery and segregation. But we should not sanitize how contested and bloody the road to justice has been. We will dishonor the Civil War if we refuse to face up to the reason it was fought.

Sunday, December 26, 2010

​We noted Monday that Anne Hatch, daughter of former state Attorney General Mike Hatch, was found dead in Chicago, apparently from suicide.

The last time Anne Hatch was in the news, she had been arrested outside a Chicago nightclub after an altercation with police. We mentioned that. Some commenters thought we shouldn't have.

Eric M. Larson would have liked a more thorough accounting. His version:

I'm all in favor of bringing up the 2005 trial... as long as we're honest about it and do some reporting beyond merely saying "a judge acquitted them" and reporting nothing else.

Anne and Elizabeth weren't merely "acquitted" -- they were vindicated by the judge who noted that the prosecution's witnesses contradicted 1) the police report written at the time of the incident, 2) recorded audio of Elizabeth's arrest, and 3) security video of the incident. That's as close to "they lied!" as you're ever going to get in a court ruling.

The police abused their power, the Hatch women stood up against that abuse, were maliciously prosecuted for it, and were declared innocent in court. The _full_ story is an example of Anne Hatch's bravery and character, but it's hard to find that story today because it's locked behind newspaper pay-walls.

Some of us still remember the court case from when it was a "current event" and the media's selective memory of it today is really frustrating.

This statement (consisting of 2 pages each signed by me) is true to the best of my knowledge and belief and I make it knowing that, if it is tendered in evidence, I shall be liable to prosecution if I have wilfully stated anything which I know to be false or do not believe to be true.

1. I am a filmmaker, author and political commentator and I produce as my exhibit [MM/1] evidence of my identity in the form of a photocopy of my passport/driving licence. I am an American citizen.

2. I am aware of the various allegations Julian Assange faces in Sweden. I am willing to act as security for Julian in the sum of twenty thousand dollars USD$20,000.

3. I am the director and producer of Bowling for Columbine, Fahrenheit 9/11, Sicko, and Capitalism: A Love Story, four of the top nine highest-grossing documentaries of all time. In September 2008, I released my first free movie on the Internet, Slacker Uprising, documenting my personal crusade to encourage more Americans to vote in presidential elections. These experiences underpinned my conviction that it is the duty of a free press to probe, and hold government and the powerful to account – and that citizens must be properly informed and have access to information in order to exercise their democratic rights.

4. Governments have always been discomfited by a probing press. With the hollowing out of newsrooms, in large part as a consequence of the new digital world, old media have largely abandoned the territory of investigative journalism.

5. I support Julian, whom I see as a pioneer of free speech, transparent government and the digital revolution in journalism. His commitment to exposing the follies of government and business offers the greater society a chance to protect itself from these follies. Some aren't just follies. Some are crimes. What do we do with someone who informs the authorities -- and in this case it is the free people in a democracy who are the "authorities" -- that a crime has been committed? Do we arrest HIM? Do we try to shut his mouth? Do we hound him, threaten him, track him down and hunt him as if HE is the criminal? He bravely informed the citizenry of what was being done in their name and with their tax monies. That is no crime. That is an act of patriotism. He should be thanked and honored, not abused and jailed. It dishonours this court to be used in this way, holding this man without bail. Julian has made the world, and my country in particular, a safer place. His actions with WikiLeaks have put on notice those who would take us to war based on lies that any future attempts to do so will be met by the fierce bright light provided by WikiLeaks and intended to expose those who commit their war crimes. His actions will make them think twice next time -- and for that we all owe him a debt of gratitude.

6. I believe that Julian takes pride in his reputation and as any journalist would understands that if he were to abscond he would ruin his reputation in the media and journalism industries.

7. I regret that I am out of the country and therefore I am unable to attend court and explain in person that I expect Julian to observe his bail conditions. I am offering to stand and provide security for him abiding by his bail conditions to the value of USD$20,000.

8. I understand that by acting as security for Julian I risk forfeiture of the aforementioned sum to the crown if he breaches his bail conditions by absconding or by not attending Court as and when required.

9. The money which I will pay to the Court, to be held as security, is my own. As I am abroad I am unable to produce any statement as evidence of these funds. However I have already transferred the sum of USD$20,000 into the client account of FSI.

10. I have not been indemnified against the loss of this money in the event of Julian breaching his bail conditions, and understand that if I were to be so indemnified it would amount to a separate criminal offence for which I could be imprisoned.

11. I have been advised by Julian’s solicitors that it would be prudent to obtain independent legal advice in relation to my liabilities as security.

Friends are remembering St. Thomas student Michael Larson as a fun-loving friend who was always up for hanging out or attending sports events.

St. Thomas University students resumed classes Monday with the start of finals week, two days after Larson died in a fire at a house he rented with three friends at 1795 Selby Av. School officials are working with Larson's family to plan his on-campus funeral, scheduled for Friday. Details are still being worked out.

"We are all mourning for Michael Larson," said Jane Canney, vice president of student affairs at St. Thomas. "He was so well-loved. It's also during finals time, and it's a challenging time for students."

St. Paul Fire Marshal Steve Zaccard said Monday that the cause of the fire is still under investigation. It apparently began Saturday in the enclosed porch and engulfed the house, forcing three people to jump out of second-story windows. The fire was reported about 3 a.m. Zaccard has said that arson is not suspected, and that the smoke detectors were working.

Larson was the lone fatality and was found on the first floor near the couch where he had gone to sleep. The Ramsey County medical examiner's office said an exact cause of death could be determined in the next day or two.

Friend and roommate Cameron Cochran, who was home at the time, described the 20-year-old from Woodbury as "a guy you could never find in a bad mood." Larson, whom friends called by the nickname "Carson," loved sports. For his 20th birthday this summer, Larson and some friends played a game of pick-up baseball at a nearby park.

"We hadn't done that since we were 14," Cochran said.

Larson, a sophomore, had just decided to major in mass communications with the goal of becoming a sports writer, Cochran said.

Jahi Bernard first met Larson when both were freshmen. They shared a dorm room and then moved into the house on Selby.

"Carson loved to celebrate National Relaxation Day," Bernard said jokingly, noting Larson's love for TV sports and lazy Sundays. "Apparently, it's a national holiday, and he loved to celebrate it."

St. Thomas is working to help Larson's roommates find temporary housing, work out their finals schedules and meet other needs, Canney said. A bookstore loaned the roommates books that were lost in the fire, the school will buy their books next semester and a student group gathered clothes for them, Canney said.

The school also is working out plans to collect contributions to help the roommates and Larson's family, she said.

"This has really fractured many, many students and faculty who knew him and loved him dearly," she said.